Bankruptcy

Bankruptcy is not right for everyone nor for every circumstance of debt turmoil. However, you might want to consider this process if you can't pay your bills, your creditors won't stop calling you or you want to stop a lawsuit, foreclosure, repossession, judgment execution, wage garnishment or other action being taken against you. While part of your property may need to be sold, some assets are "exempt," meaning that you can hold onto them if they don't exceed a certain value. In North Carolina, these exemptions may include your house, motor vehicles, clothing, household goods, furniture, tools, other work items and college savings, retirement and pension accounts. We can determine if bankruptcy is right for you and whether Chapter 7 or Chapter 13 is the appropriate form.

Also known as liquidation, Chapter 7 bankruptcy may be used by individuals and small businesses to shield themselves from creditors. A bankruptcy trustee locates and sells nonexempt assets, using the proceeds of the sale to pay off a portion of outstanding debts. Then, the court discharges the remainder of the debt except for debts considered nondischargeable, such as mortgages and other debts secured by property. In most Chapter 7 cases, all property can be exempted, so nothing may have to be liquidated by the trustee. However, you must be able to pass a means test to qualify for Chapter 7.

Chapter 13 bankruptcy, also known as a wage earner’s plan, is not a debt discharge but rather a court-assisted restructuring. It calls for repaying most debt over a period of three to five years. Chapter 13 may be your only option if you cannot pass the Chapter 7 means test. It also handles secured debt better than Chapter 7 because it allows you to “cram down” (reduce) a secured loan to the value of the collateral. Additionally, Chapter 13 can stop a home foreclosure and help you catch up on your mortgage, whereas under Chapter 7, the home may be lost.

A bankruptcy typically includes several steps:

• Pre-bankruptcy credit counseling - You must take an approved credit counseling course before you file, which teaches you potential alternatives to bankruptcy.
• Filing for bankruptcy - You begin your case by filing a petition listing your debts and assets.
• Proofs of claim - Your creditors must document their claims of outstanding debts.
• Post-petition credit counseling - You must complete a second credit counseling course during your bankruptcy, which advises about debt management tools to use in the future.
• Liquidation of debtor's estate - In a Chapter 7, a trustee appointed by the court identifies your non-exempt assets and sells them off to pay your creditors.
• Repayment plan - In a Chapter 13, you must present the court with a good-faith plan to pay off part of your debts over a three-to-five-year period. Once the court approves the plan, you must follow through with it.
• Discharge - After you have completed all these steps, the court will wipe out most of the remainder of your debts.

Both Chapter 7 and Chapter 13 involve court filing fees and other costs, such as paying for mandatory credit counseling. For a Chapter 7 bankruptcy, the filing fee is $335 and for Chapter 13the fee is $310.

There are also attorneys’ fees. The typical fee for Chapter 7 is from $1,000 to $1,300. For Chapter 13, the base attorney fee, set by the bankruptcy court, is $4,500 and is typically the same no matter which lawyer you use. We usually require a $660 deposit before filing and collect the remainder of the rest of our fees through the monthly Chapter 13 plan payments’ We can advise you about the exact amount of your fees at your initial free consultation at our office.

Contact us today for bankruptcy guidance in Greensboro & Burlington, NC and surrounding areas

Bankruptcy and its numerous related concerns can be confusing for many. At Blalock Law Offices, P.A., I give you the personal attention you deserve and answer all your questions thoroughly. Our office serves the Greensboro, Asheboro, Burlington and High Point areas of North Carolina. Please call us today at (336) 274-2343 or contact us online today.